As you may know, the cryptocurrency industry always had some gaps. The blockchain technology, Bitcoin, and blockchain-based companies are still pretty new, so there’s still some changes to be made. But firms continuously develop new tools to improve the industry.
While people use cryptocurrencies in order to be independent of banks and government, it is true that the anonymity granted also serves as a loophole for illegal activities. After the analysis recorded $2.8 billion laundered in 2019, the government took action and set up the AMLD5 directive.
What is AMLD5?
AMLD5 is an Anti Money Laundering Directive set by the European Commission meant to lower terrorist funding and money laundering. It is mandatory for every EU member country to follow the new regulation.
However, the information is not very well structured, so each country acts how they think it’s better. Yet, the aim of these actions remains the same – to stop criminal activity.
The Netherlands’ position
Since the crypto industry offers anonymity for its users, it is pretty clear that this is one of the main concerns of AMLD5. Therefore, starting with May 21st, 2020, some new rules were applied to Dutch exchanges, brokers, and wallet providers:
- Dutch crypto companies must get registered with the Dutch National Bank;
- Crypto providers need to demonstrate that they have the technology to identify the users’ identity and provide Dutch authorities with this information;
- Any form of crypto activity will be supervised by the Dutch National Bank;
- Ministers in the Netherlands also mentioned that crypto payments shouldn’t exceed EUR 3,000.
That changes the crypto world as we know it dramatically. And the costs are not small at all. Dutch Crypto companies had to pay EUR 5,000 as a registration fee. Also, most of the supervising activity of the national bank is paid by the companies – and we talk about a total of EUR 1.7 million annually, with a maximum of EUR 20,000 per company.
How did crypto users respond?
As expected, people weren’t pleased at all. The main reason for utilizing cryptocurrencies was indeed to be independent of government and banks, which is the opposite of what AMLD5 wants.
Also, the process of identifying cryptocurrency users is expensive – that’s why it is so hard for hackers. The cost of hacking the accounts is too high compared to the actual “gains”. But the government is willing to pay that amount of money. And they impose crypto companies to do that as well.
The main concern is how small crypto companies will survive. For example, Arthur Stolk, the director of Dutch cryptocurrency fund Icoinic, insisted that the registration fee should be different based on their trading volume. Because the way everything is put in motion right now makes a lot of companies close their activity.
Less crypto companies will eventually lead to less crypto users, and it would be a shame to give up a technology with so much potential.
Are the crypto days over?
We wouldn’t say so. Many individuals believe that this is just a hop we have to go over.
Much more than that, it is believed that the reason the government wants to control crypto is not so much focused on the criminal bitcoin exchanges – but on the rising chances of crypto to be considered a real currency.
Plus, according to Beste Bank, there are countless Dutch crypto companies that it’s safe to collaborate with, such Bitvavo, BTC Direct, or Hodl Hodl.
How crypto users will deal with that inconvenience remains to be seen. All we need to do is not lose hope – the innovating potential of millennials and next generations shouldn’t be overlooked.